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1 realtor report

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2010 housing statistics for Southwest California

2010 housing statistics for Southwest California


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  • 1. Your Happy New Year ReportThis report is going to be a long one but I hope you find the information useful, or at least mildlyinteresting. In addition to the normal volume and price statistics, I’ve included annual recap numbers,some historic trends and where our foreclosure market stands.While it’s easy, helpful and at times depressing, to see where we’ve been, it’s much trickier to forecastthe future without a crystal ball. Why? Because there are so many variables at play right now – in theeconomy in general and the housing market specifically. Experts far more knowledgeable than myselfare equally mixed on what to expect in 2011 and beyond.Most agree that we will not see significant shifts in either sales or median prices over the next 12months as we shoulder through more foreclosures and a sagging employment base. Until the residentialmarket picks up some steam, the commercial market will continue to lag as well. There is evenunprecedented talk out there of implementing short sales and loan modifications for commercialproperties in hopes of avoiding mass default. If they do that let’s hope they’re more effective than theyvebeen in the residential sector. Yeah, that could happen.Our local market produced some pleasant surprises of its own last year. While sales statewide were offtheir 2009 pace and Riverside County sales were down nearly 25%, Southwest California sales were upmore than 30% year-over-year. 4 cities set new volume records.Inventory levels remained virtually unchanged when adjusted for unsalable homes (like short sales and$600,000+ homes) and in spite of the length of time lost to short sale negotiations, average days onmarket also remained fairly constant. That’s all good news compared to spiked inventories, months onmarket and no sales, which was more the norm just 3 years ago.While the state median price was up a few points year over year, our city medians were largelyunchanged over 2009 and back into 2008. Hopefully this stability in our market is a positive harbingerthat we’ve established a baseline in spite of a market shift from bank-owned properties to onedominated by short sales. 2011 is widely anticipated to produce another tsunami of foreclosures but aslong as demand stays as strong as it has been, we’ll weather that storm with minimal impact to ourprice level.The downsides? Distressed properties continue to make up nearly 75% of our sales. Until that numberdrops well below 50% we will not see any appreciable increase to our property values. And as long asunemployment numbers stay high, and construction jobs languish, we will continue to accumulatedistressed properties. Many expect that trend to continue well into 2012 at least. If California continuesto chase higher paying jobs out of state at the current rate (144 companies in 2010), the employmentpicture will not improve any time soon, keeping housing values low and increasing pressure oncommercial properties.One final area to watch in 2011 – while distressed and underwater homeowners attract the headlinesand have defined our market for the past couple years, 75% of homeowners are NOT upside-down andstill have equity in their homes. Granted it’s considerably less cash than it was in 2006 but equitynonetheless. If banks start to relax their current overly-regulated loan programs and get some of theirmoney back into circulation, this could represent a significant boost from pent-up move-up-demand –especially into those upper end homes. Not only would this boost sales in 2011 but there would be animmediate positive impact on median price and general property values.Consumer confidence is they key. Here’s hoping for more of that in 2011.
  • 2. Real Estate: Finally a good investment? The housing market still looks pretty bleak: There were a record 1 million foreclosures last year, home prices are still falling in many regions, and the number of "underwater" properties is at a record high. And things dont look much better in other areas of real estate. The number of construction jobs continues to decline, even as other parts of the economy have added jobs. And mortgage rates have moved higher as long-term Treasury yields have backed up during the past few months. Basically, the real estate market remains a mess. Real estate encompasses a wide range of markets – homes, apartments, hospitals, office buildings, strip malls, dormitories and other properties. But for our purposes, lets focus on residential real estate, or homes. Here are four reasons to think residential real estate might represent a bargain – with one big caveat.• Everyone hates homes - When the housing market is in the doldrums, people tend to avoid thinkingabout the value of their home. Sellers complain they’re not getting offers and buyers bemoan the strictlending requirements. However, prospective buyers should be contrarian and take advantage of a downhousing market.• Smart people are buying real estate - A prominent hedge-fund manager said in a speech last fall: “Ifyou don’t own a home, buy one. If you own a home, buy another one, and if you own two homes, buy athird and lend your relatives the money to buy a home.” He believes that interest rates and home priceswill rise this year, so real estate bargains won’t last much longer.• Real estate performs well during inflation – Convention says Treasury Inflation Protected Securities,commodities, and real estate do well in an inflationary environment. Real estate performed well during theperiod in the 1970s, when persistent inflation and high unemployment occurred.• Demand may be coming back - Job creation and getting people employed are the two major factors in thehousing rebound. There’s much debate about when the job market will recovery. Optimists say therecovery will happen this year, while pessimists say it won’t happen for several years.Read the full storyCNN MoneyExisting home sales jump 12 percentSales of existing homes jumped in December, marking the fifth month of gains in the past sixmonths, based on an industry report released Thursday.Read the full storyLos Angeles TimesHome seizures by banks decline in stateFewer Californians grappled with foreclosure last year, bucking a national trend and giving homeownersfresh hope that the states housing market could be on the mend.Read the full storyCNN Money1 million homes repossessed in 2010Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even asnotices started leveling off during the end year.Read the full story
  • 3. 7 Year Regional Housing Summary Temecula, Murrieta, Lake Elsinore, Menifee, Wildomar & Canyon Lake Single Family Residential - Full Value Sales * Prepared by GeneWunderlich@srcar.org 2004 2005 2006 2007 2008 2009 2010Temecula # Sales 1,975 1,742 1,141 805 1,569 1,334 1,987 Median $ $437,158 $484,978 $526,237 $475,522 $337,735 $289,875 $300,234 Total $ $863,387,544 $844,831,095 $600,261,385 $382,795,143 $529,906,738 $386,693,250 $596,564,958 Avg $ / SqFt $222 $249 $252 $251 $152 $124 $128Murrieta # Sales 1,679 1,661 1,252 687 2,054 1,666 2,236 Median $ $432,511 $488,747 $530,912 $473,562 $304,466 $271,107 $270,878 Total $ $726,186,109 $811,809,044 $664,702,241 $325,336,865 $625,373,335 $451,664,262 $605,683,208 Avg $ / SqFt $204 $227 $231 $206 $126 $105 $110Wildomar # Sales 361 327 317 218 473 287 398 Median $ $393,540 $442,018 $463,920 $435,608 $296,054 $225,739 $220,745 Total $ $142,067,790 $144,539,913 $147,062,772 $94,962,580 $140,033,463 $64,787,093 $87,856,510 Avg $ / SqFt $218 $242 $238 $246 $149 $97 $97Lake Elsinore # Sales 924 1,054 700 335 1,154 959 1,387 Median $ $306,607 $363,543 $431,158 $366,358 $183,819 $179,965 $182,925 Total $ $283,304,406 $383,174,322 $301,810,425 $122,729,874 $264,169,930 $172,586,435 $253,716,975 Avg $ / SqFt $197 $237 $265 $221 $121 $87 $91Menifee # Sales 820 763 520 498 1,005 651 1,142 Median $ $323,138 $364,695 $418,974 $370,671 $259,504 $201,899 $206,414 Total $ $264,972,818 $278,262,603 $217,866,263 $184,594,241 $260,801,185 $131,436,249 $235,724,788 Avg $ / SqFt $197 $214 $215 $190 $119 $91 $96Canyon Lake # Sales 468 342 286 133 330 306 379 Median $ $443,384 $480,200 $567,071 $548,205 $300,561 $241,416 $251,006 Total $ $207,503,712 $164,228,400 $162,182,306 $72,911,265 $99,185,130 $73,873,296 $95,131,274 Avg $ / SqFt $225 $264 $289 $271 $148 $114 $119 ### denotes new peak sales volume * Summary data courtesy of Chicago Title & MRMLS. All figures presumed to be accurate but not guaranteed. You may have read recent articles citing drops in 2010 home sales in Riverside County, California in general and the weakest year nationwide since 1997. Not so in Southwest California! All cities in the region exceeded 2009 sales volumes while 4 of the 6 surpassed previous high water marks. Menifee set the sales pace outstripping 2009 sales by 43%. Temecula sales were up 33%, Lake Elsinore 31%, Wildomar 28%, Murrieta 25% and Canyon Lake 18%. Temecula exceeded their 2004 peak by just 12 homes while Murrieta added 182 homes to the record set in 2008. Median prices weren’t bad either. We’ve been pointing out that stability all year long and you can see where we ended up. Maintaining stable prices in spite of a substantial increase in sales and the changing product mix is a very good sign (hopefully) that we have hit bottom and are poised to recover as soon as the general economy allows. And the total revenue from real estate, which impacts city coffers so directly, has also shown improvement as a result of increased sales volumes – although still well shy of the boom years.
  • 4. 500 7 Year Sales by Month450 (w/polynomial trendline)400350300250200150100 50 0 9/04 9/05 9/06 9/07 9/08 9/09 9/10 Murrieta Temecula Lake Elsinore Menifee Wildomar Canyon Lake While unit sales in the region have described an almost perfect smile during the past 7 years, the trendline for median price is more like a sneer, or a grimace. The good news is that it appears to have bottomed out.$800,000 7 Year Median Price by Month$700,000$600,000$500,000$400,000$300,000$200,000$100,000 $0 3/04 9/04 3/05 9/05 3/06 9/06 3/07 9/07 3/08 9/08 3/09 9/09 3/10 9/10
  • 5. 700 Quarterly Unit Sales600 Single Family Residential500400300200100 0 Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake 3rd Quarter 09 4th Quarter 09 1st Quarter 10 2nd Quarter 10 3rd Quarter 10 4th Quarter 10 In spite of slowing sales volumes in the last half, as indicated above, the year ended on a up note thanks to strong first half sales. With an up-tick in December sales and improving economic and jobs data, we’ll just have to wait and see what 2011 brings. 2 22,500 1 1 , , , , 9 1 9 0 5 2 3 Annual Unit Sales 8 1 1 1 7 , 4 6 Single Family Residential 5 7 1 7 , , ,2,000 , 6 6 6 4 1 5 1 7 6 6 2 , 6 , 9 1 1 6 1 9 3 , 1 3 1 , 2 1 , 8 , 3 11,500 , 1 7 1 4 5 , 1 4 2 0 5 4 0 1 9 5 4 9 2 0 2 4 5 8 8 5 9 71,000 0 6 4 7 2 6 6 5 8 0 0 3 5 5 7 4 0 4 4 2 9 1 3 3 7 3 6 3 3 3 3 0 8 3 3 6 2 3 2 9 3 8 4 2 3 0 7 500 1 2 8 8 8 1 7 2 1 0 9 7 1 5 6 7 6 8 3 3 0 Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake 2004 2005 2006 2007 2008 2009 2010
  • 6. 350000 Quarterly Median Price Chart300000250000200000150000100000 50000 0 Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake 3rd Quarter 09 4th Quarter 09 1st Quarter 10 2nd Quarter 10 3rd Quarter 10 4th Quarter 10Median prices – ehhhh, not so much. However, many areas of the state that enjoyed salesincreases this year did so while sacrificing median price. Not so in our region. Pricesgenerally showed some quarter over quarter improvement over the course of the year toend up about the same as last year. Two years of price stability in this market is definitelya good thing. Annual Median Price Chart $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $$600,000 $ 4 4 5 4 4 4 5 4 3 4 4 4 $ 4 $ $ 4 4 4 5 5 3 8 2 7 $ 3 8 3 7 9 4 6 3 3 3 3 3 1 3 4 8 6 4 $ 7 7 4 6 5 3 2 8 0 3 $ 3 2 3 5 $ 6 1 6 6 8 3 0 7 8 $ $ 3 $ 3 $ 3 6 4 0$500,000 , , , , 3 , , , , 3 $ $ , , , , 3 , , , , , , 3 2 2 2 , $ 1 9 2 5 7 5 7 9 5 0 5 0 9 6 0 , 1 , , 9 3 2 0 2 0 $ 0 2 2 9 3 $ , 8 $ 3 6 6 2 2 5 7 3 2 0 1 4 1 6 4 7 7 4 1 2 0 $ 6 5 5 7 8 0 7 0 0 9 6 , 5 $ 2 8 8 7 2 7 1 7 2 2 , 0 8 0 8 2 2 , 4 8 5 9 4 7 $ 4 0 1 5 5 , 1 0 , $ $ $ 1 2 , 4$400,000 3 , 2 8 5 1 9 2 1 2 4 , , 2 6 3 5 1 8 0 1 1 1 3 , 0 5 5 0 0 0 , 3 6 1 8 5 8 8 8 6 , 7 7 5 1 6 6 , , 7 0 4 0 7 4 3 9 2 , 1 4 5 7 0 , 0$300,000 7 8 7 , , 1 , 4 8 4 3 4 6 8 9 9 1 6 9 5 9 1 6 2 4 9$200,000 9 5 5$100,000 $0 Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake 2004 2005 2006 2007 2008 2009 2010
  • 7. 6 December Demand Chart 700 6 5 3 3 4 600 7 6 500 5 3 2 400 2 4 4 2 1 1 300 1 2 0 7 1 1 1 3 2 6 5 4 1 8 200 9 9 0 9 1 8 9 8 7 7 7 8 7 6 4 4 9 4 5 6 4 3 3 4 2 6 3 2 3 0 5 5 7 3 1 3 3 1 100 1 6 4 8 1 8 . . . . . . 2 2 9 7 6 7 8 3 0 0 On Market Pending Closed (Demand) Days on Market % Selling Months Supply (Supply) Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar December Market Activity by Price Point Price On 60 Day 60 Day REO Percent Point Market Close Fail Close Selling Temecula, Murrieta, Lake Elsinore, Menifee, Wildomar, Canyon Lake Sun City, Hemet, Winchester, Perris & San Jacinto$80,000 17 29 15 0 86%$100,000 341 257 175 130 58%$200,000 1,632 857 738 400 54%$300,000 1,295 671 532 202 56%$400,000 315 207 193 38 52%$500,000 80 36 61 7 37%$600,000 48 21 33 2 39%$700,000 36 15 25 5 38%$800,000 36 7 19 1 27%$900,000 22 6 9 2 40%$1,000,000 19 2 7 0 22%$2,000,000 72 5 33 0 13%$3,000,000 17 2 10 0 17%$4,000,000 2 0 1 0 No Sale$5,000,000 3 0 0 0 No Sale$10,000,000 4 0 0 0 No Sale$25,000,000 2 0 0 0 No Sale TOTAL 3,924 2,086 1,834 787 53% December Market Activity by Sales Type Active Closed Failed In Escrow % ActivityBank Owned 22% 42% 14% 38% 27%Short Sales 52% 30% 68% 48% 50%Standard Sales 26% 28% 18% 14% 23%Other 1% 1% 2% 1% 1%
  • 8. 8.07.06.05.04.03.02.01.0 Inventory / Months Supply0.0 3/10 6/10 9/10 12/10 Murrieta Temecula Lake Elsinore Menifee Wildomar Canyon Lake Inventory is defined as how long it would take to sell the homes currently on the market if nothing new came along. A healthy inventory is pegged at 5 – 6 months to strike a balance between buyers and sellers. During the past 3 years we’ve seen inventory as high as 32 months and as low as 2. Neither inventory nor days on market increased appreciably during 2010. Referring to a previous chart, if you back out the homes listed for $600,000 and over, salable inventory remains right at the 2 month level. High end properties also remain on the market for longer periods and short sales (50% of the market) take much longer than average to close, extending average days on market. If you adjust for those variables, ADOM for salable properties actually declined during 2010.120 Average Days on Market100 80 60 40 20 0 3/10 6/10 9/10 12/10 Murrieta Temecula Lake Elsinore Menifee Wildomar Canyon Lake
  • 9. Source: ForeclosureRadar.com
  • 10. Source: ForeclosureRadar.com
  • 11. Source: ForeclosureRadar.com
  • 12. Source: ForeclosureRadar.com
  • 13. Source: ForeclosureRadar.comMenifee CA Foreclosure TrendsCanyon Lake CA Foreclosure Trends
  • 14. As you have questions regarding your city or haverequests for specific information not covered in these pages, please don’t hesitate to call me. Gene Wunderlich 951-205-1911 GeneWunderlich@srcar.org http://gadblog.srcar.org

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